PG&E gets go-ahead from PUC to raise residential rates 5.8 percent

SAN FRANCISCO -- PG&E residential customers can expect a 5.8 percent increase in their gas and electricity bills starting in September after approval by state regulators Thursday of the utility's request for rate hikes.

The decision by the state Public Utilities Commission was the first general rate increase for PG&E since the 2010 natural gas explosion in San Bruno that killed eight people and wrecked a quiet residential neighborhood.

"We have given PG&E the resources that it needs," PUC Commissioner Michael Florio said in reference to the 5-0 vote. "It is PG&E's duty to use its resources effectively to ensure its system is operated in a manner that provides safe, reliable and affordable service to its customers."

Overall monthly bills for an average residential customer will increase $7.50 from the rate hikes, up from the current average bill of $129 a month, according to an estimate provided Thursday by PG&E. The current electricity bill of $80 will rise $3 a month, or 3.8 percent, while the average gas bill of $49 a month will rise $4.50, or 9.2 percent.

Higher gas bills are expected to begin in September, and the higher electricity bills will go into effect in October, PG&E spokesman Jonathan Marshall said.

San Francisco-based PG&E says the increased revenues will finance an array of projects and activities, including a new gas control center in San Ramon, new technologies to detect natural gas leaks and an improved smart grid program to upgrade the reliability of the electricity system.

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The rate-hike approval comes amid a pending fine of up to $2.25 billion against PG&E by the PUC for the San Bruno blast, as well as a federal criminal case against the utility that could result in fines of up to $1.13 billion. None of the revenue from the rate case approved Thursday will be used for payments of any of the potential fines, Marshall said.

PUC officials said their approval of the rate hikes was based in part on whether the increased revenue would improve safety and reliability for PG&E's gas and electricity system.

Consumer groups lambasted the decision.

"We keep paying more and more and we are not getting what we paid for," said Mindy Spatt, a spokeswoman for The Utility Reform Network, a consumer group. "This is business as usual for PG&E."

The PUC ruling authorized an increase of $460 million in revenue for the utility. PG&E's initial request in late 2012 was for a revenue increase of $1.16 billion.

"Although the decision represents a significant cut in our request for additional resources to modernize our system for the 21st century, we will continue to make safety our top priority," Pacific Gas & Electric President Christopher Johns said in a prepared release.

The higher bills on their way to customers will more than offset a proposed 1 percent cut -- averaging about 55 cents a month -- in natural gas bills. The potential reduction, which has yet to receive PUC approval, is due to lower expenses for PG&E's pipeline safety upgrade program.

"Our residential bills will remain well below the national averages for gas and electric service," Johns said.

In an odd aside to the proceedings, PUC President Michael Peevey for the first time acknowledged, indirectly, a new controversy that has engulfed PG&E and the PUC after San Bruno officials disclosed email exchanges that suggest a cozy relationship between the utility and its regulator.

In some of the emails, Peevey offered public relations advice to PG&E on handling revelations of the utility's criminal indictment. In another email, PG&E regulatory executive Laura Doll wrote to the chief of staff of Commissioner Peevey, expressing enthusiastic gratitude for advice that the staffer, Carol Brown, provided to PG&E. "Love you. Thanks," Doll wrote.

During Thursday's meeting, some utility customers demanded that Peevey resign. Another customer sarcastically gave Peevey a verbal love note.